A Limited Liability Partnership(LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner's misconduct or negligence, thus individual partners are shielded from joint liability. If you want to start your business with Limited Liability Partnership, then you must get it registered under Limited liability Partnership Act, 2008.
A Limited Liability Partnership(LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner's misconduct or negligence, thus individual partners are shielded from joint liability. If you want to start your business with Limited Liability Partnership, then you must get it registered under Limited liability Partnership Act, 2008.
| S.No | Form name | Form purpose |
|---|---|---|
| 1 | RUN – LLP (Reserve Unique Name- Limited Liability Partnership | Form for reserving a name for the LLP |
| 2 | FiLLiP | Form for incorporation of LLP |
| 3 | Form 5 | Notice for change of name |
| 4 | Form 17 | Application and statement for the conversion of a firm into LLP |
| 5 | Form 18 | Application and Statement for conversion of a private company/unlisted public company into LLP |
| S.No | Time limit | Particulars |
|---|---|---|
| 1 | Within 30 days after LLP Incorporation | 1. LLP Agreement 2. Application for Permanent Account Number (PAN) 3. Application for Tax Deduction and Collection Account Number (TAN) 4. Opening Bank Account in LLP Name 5. Books and Accounts of LLP 6. Shop and Establishment Registration 7. Professional Tax Registration – Employer & Employee |
| 2 | Within 60 days after LLP Incorporation | 8. Infusion of Initial Capital by Subscribers to Memorandum 9. Appointment of Auditors |
| 3 | Within 180 days after LLP Incorporation | 10. Goods and Services Tax (GST) Registration 11. Trademark Registration |
Registered office proof: It can be registered document which shows the title of the premises in the name of the company or notarized copy of lease deed or rental agreement
| S.No | Criteria | Company | LLP |
|---|---|---|---|
| 1 | Capital Requirements | Minimum authorized and paid up capital is ₹ 1 lakh | No minimum capital requirements |
| 2 | Withdrawal of Capital | Once paid up, capital cannot be withdrawn by shareholders without the approval of court. Company can buy back the shares subject to Companies Act. | Partners can withdraw capital subject to LLP agreement. It is also possible for a partner to reduce contribution liability after giving notice to creditors |
| 3 | Interest on capital | Interest on capital can be claimed only for infrastructure company etc. and subject to permission from the Government of India. | LLP can provide interest on capital without any approval subject to LLP Agreement. |
| 4 | Termination of ownership | A shareholder (member) can terminate membership by transferring the shares in his name to any person subject to conditions in Articles of the company. A shareholder cannot resign from the company | A partner continues as a partner in the LLP even after transferring all his rights in the LLP unless LLP agreement provides otherwise. A partner can even resign from the LLP. |
| 5 | Removal from the ownership | It is not possible to remove a shareholder from the company by others. | It is possible to remove a partner from the LLP subject to the LLP agreement. |
| 6 | Directors / Designated Partners | A director need not be a shareholder. | Designated Partner should be a partner in LLP. |
| 7 | Management | Management of Company is vested with Board of Directors elected by shareholders | LLP is managed by partners as per LLP agreement. Partners can delegate management power to a management team or single partner |
| 8 | Meetings for Decisions | Operational decisions are taken at Directors' meeting and directors are required to meet once in every quarter and general meeting of shareholders to be conducted once in a year mandatorily. | No such requirements of meetings. Decision process as per LLP agreement |
| 9 | Remuneration | Directors can take remuneration. No restriction in Companies Act | Working partners can take remuneration subject to LLP agreement |
| 10 | Tax Rate | Corporate tax is applicable to limited company @ 32.44% on net profit of the company | 'Firm' tax is applicable to LLP @ 30.90% on net profit of the company. |
| 11 | Dividend Distribution Tax (DDT) | Profit if distributed as Dividend, it will attract Dividend Distribution Tax (DDT) @16.45% | There is no DDT. Profit after tax will be credited to partners' account and it will not be taxable in the hands of partners again. |
| 12 | Audit Requirements | Accounts to be audited by a Chartered Accountant whether the company does any business not. | Accounts to be audited by a Chartered Accountant only if the turnover exceeds ₹ 40 lakh or contribution exceeds ₹ 25 lakh. |
| 13 | Registers and Records | Limited Company is required to maintain lot of registers, records and to keep minutes of board meetings and general meetings from time to time irrespective of doing business or not. | LLP is not required to maintain any registers, records and minutes unless specifically mandated by LLP agreement. Partners are at liberty decide the requirements |
| 14 | Maximum number of owners | 200 is the maximum number of shareholders allowed in private Companies | No such limit. An LLP can have any number of partners |
Obtain DSC (Digital Signature) from Government Recognized Certifying Agencies
Apply for DPIN(Designated Partner IDentification Number) in e-Form FiLLip where Maximum of Two DPIN can be alotted through FiLLip or apply in Form DIR-3 if more than 2 partners
Apply for Name Approval either under LLP-RUN(Limited Laibility Partnership Reserve Unique Name) with Two names option or One name can be proposed in e-form FiLLip which would be valid for 3 months
FiLLip (Form for incorporation of Limited Liability Partnership) which shall be filed with Registrar of Companies of the Jurisdiction in which the registered office of the LLP will be situated within 60 days of the name approval letter
File Limited Liability Partnership Agreement within 30 days of incorporation of LLP
Apply for PAN & TAN separately
Opening Bank Account
Form 8 (statement of Account and Solvency) within 30 days from the end of six months of financial year to which it relates
Books of Accounts of LLP
Shop and Establishment Registration within 30 days of registration
Professional Tax Registration-Employer & Employee within 30 days of incorporation
Infusion of Initial Capital by Subscribers to Memorandum Within 60 days of Incorporation
Appointment of Auditors whose capital contribution exceeds ₹ 25 lakhs or annual turnover exceeds ₹ 40 lakhs has to get accounts audited by a Chartered Accountant in Practice.
Goods and Services Tax(GST) Registration: Every business with annual turnover exceeds ₹ 40 lakhs(Service providers ₹ 20 lakhs) is required Within 180 days of Incorporation
Trademark Registration so that another Company or LLP will not be registered with the same or a closely-resembling name Within 180 days of Incorporation
Within 30 days from the end of six months of financial year to which it relates on or before 30th October every year
Designated partners must sign the form digitally. Further, it must be certified by a chartered accountant, auditor or the accountant of the LLP
There are two parts in Form 8. They are:
To maintain the active status of the LLP it is required to file the forms even if no transaction has taken place during the year so that MCA is updated with the state of affairs of LLP
The filing fees is ₹ 50 and the penalty of ₹ 100/day if you have not filed this form
Within 60 days of closure of financial year i.e has to be filed on or before 30th May every year
It must be Digitally signed by one of the Designated Partners of the LLP. In case total obligationof contribution of partners of the LLP exceeds ₹ 50 lakhs or turnover of LLP exceeds ₹ 5 crores, then LLP Form 11 needs to be certified by a Company Secretary in whole time practice.
To maintain the active status of the LLP it is required to file the forms even if no transaction has taken place during the year so that MCA is updated with the state of affairs of LLP.
The filing fees is ₹ 50 and the penalty of ₹ 100/day if you have not filed this form
In case Audit is not required-31st of July every year
In case Audit is required -30th of September every year
LLPs involved in International Transaction -Form 3CEB-30th November of every year
On or before 30th of September every year
Self-attested Documents and Details required are:
Penalty or Consequences for not filing Form 11 and Form 8:-
Yes, an existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act.
ROC – Filings:Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP
Yes, any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act.
ROC- Filings:Form 18 needs to be filed with the registrar along with Form 2 for such conversion.